New Clause.—(EASTER OR OTHER SIMILAR OFFERINGS TO BE EXEMPT FROM INCOME TAX.)

HC Deb 23 June 1965 vol 714 cc1768-805 Easter or other similar offerings made to clergymen or other ministers of religion shall not be regarded as income for any of the Income Tax Acts for any future year of assessment.—[Sir Cyril Black.]

Brought up, and read the First time.

Sir Cyril Black (Wimbledon)

I beg to move, That the Clause be read a Second time.

It will be within the knowledge of hon. Members of the Committee that this new Clause deals with a matter which, on a number of occasions, has been debated in this Committee and this House. The most recent occasion was in 1960. There has, therefore, been a fair interval of time and circumstances have somewhat changed since this matter was last debated. I make no apology for moving the Second Reading of this new Clause today because, although the matter with which it deals has often been discussed it will continue to be raised and discussed while the injustice with which it seeks to deal remains.

It may be that the drafting of my new Clause does not meet all the requirements of the Treasury and of parliamentary draftsmen. I would not be prepared to quarrel if that point were made against me. I am concerned that the Committee should have an opportunity of debating this matter and, if the principle I am asking the Committee to adopt can be conceded, I am very willing to leave it to the Government to use the services of their expert draftsmen in putting the Clause into a condition which is satisfactory to the Treasury.

It has been said in the past, and I wish to deal with this matter in my speech, as this is the only opportunity I shall have, that to make the concession which is sought would create many anomalies and open many floodgates. This I deny. I hope that I can satisfy the Committee that what we are dealing with here is a unique case, a case which stands apart from any other and that, therefore, to make this concession would not create embarrassment by setting up similar claims elsewhere.

The point has been made in reference to some of the new Clauses, moved unsuccessfully in the past, that they dealt only with the clergy of one church, the Church of England. That has been a valid criticism. I am certain that the Committee would wish, if the principle I am commending were accepted, that this concession should apply to the clergy of churches of all denominations. No one would desire today that any preferential treatment should be given to one Church or to the clergy of one Church. What we are concerned with is the general case of the whole ministry of the Christian Church and any concession which can be granted should be equally available to all churches and to the ministers of all Churches.

I have made it quite clear that while, of course, the new Clause would relate particularly to the Easter offering in the Church of England it would include other similar annual freewill offerings made for the benefit of the clergy in other denominations. It is very important that this point should be emphasised.

The position of clergy, priests and ministers of religion is unique. They are not in the same category as any other class of taxpayers. They are not, in the strict use of the word, employed, but are called to the holy duties which they undertake. They are not, in the ordinary sense of the term, paid for the duties that they render, but they are maintained in the services of their churches at what usually cannot be described as other than a minimum standard of living necessary to maintain them in a condition of efficiency to discharge the duties which they are called upon to perform.

I wonder how many of us and how many church attenders generally realise, when we make our often inadequate contribution to the Easter or similar offering, that, as the law stands at the moment, and as the practice is observed, the recipient is, in most cases at any rate, charged tax by the hard-hearted and grim-faced tax gatherer. This is a position which is probably not generally realised by those who make their contributions to the offerings.

The law on this matter, as far as I have been able to ascertain it, is at present full of injustices and inequalities. I am advised that, as matters stand at present, a vicar is, for tax purposes treated like a professional footballer. He would get a much better deal if he were treated as a professional cricketer, because a footballer's agreement with his club contains something about a benefit which he is to receive after so many years' satisfactory service, and, therefore, the inland Revenue treats the benefit as covered by contract and the amount received by the professional footballer is taxable in the hands of the player.

On the other hand, a cricketer has no such clause in his contract. Although a benefit is awarded by vote of the county committee, it can be withheld without doing violence to the terms of the contract, but in practice it seldom is withheld. The principle seems to be: no contract, no tax. This results in the professional footballer paying tax on his benefit and the cricketer escaping such tax. If the vicar could be brought under the umbrella of the professional cricketer, he would be much better off than he is at the moment, because the treatment he at present receives is the same as that afforded to the professional footballer.

I understand that the reason for this is that the Treasury has ruled that the Easter offering to the vicar is contractual, because of a few lines in the Book of Common Prayer. These lines are usually in extremely small type and I doubt whether the majority of regular churchgoers have noticed the paragraph. The Book of Common Prayer says this: And yearly at Easter every Parishioner shall reckon with the Parson, Vicar, or Curate, or his or their Deputy or Deputies; and pay to them or him all Ecclesiastical Duties, accustomably due, then and at that time to be paid. On the strength of that insertion in the Book of Common Prayer—the insertion was at a time before Income Tax was imposed either on vicars or on the general body of citizens—vicars and clergy are liable for tax on the Easter offerings, for which they would not be liable but for the fact that this paragraph appears in the Prayer Book.

There are various ways, so I understand, by which a vicar who wished to do so could probably free himself from the burden of tax on the annual free will offering of his parishioners. For instance, a vicar could say, "This year I intend to forgo the Easter offering. No collection will be taken for me at Easter in church, but there will be a retiring collection at Christmas, for which there is no provision in the Prayer Book and no provision in my contract. The result will be that you can help me at Christmas in just the same way as you would help me at Easter under the usual procedure, but if the gift is made uncontractually at Christmas, instead of contractually at Easter, I shall not have to pay tax on the collection."

Sir Harmar Nicholls (Peterborough)

Would that be tax evasion or tax avoidance?

4.15 p.m.

Sir C. Black

I should have thought that it was probably tax avoidance rather than tax evasion. Again, it would be open to the vicar to announce on Easter Sunday, "There will be no Easter offering this year, but if, during the week you, my parishioners, or any of your friends, care to drop money anonymously through my letter box at the vicarage, I will be happy to receive in that form tangible evidences of your good will. This will not be part of my contract or the conditions of my employment, and there is at least a good chance that by that means I shall not have to pay tax on your generosity." Is it desirable that the vicar should be put in the position of having to resort to such devices to deal with a situation which ought to be dealt with by the decision of the House of Commons?

Money given by members of congregations to the Easter or other similar offering has already borne tax in the hands of the donors. The donors have discharged in full their liabilities to the tax collector. This can be fairly assumed, because otherwise they would not be in the congregation of a Christian church. Having discharged in full their liabilities to the tax collector, it is out of the net income left them after paying their taxes that, from the goodness of their heart, they express appreciation to their minister.

It may be said that, if the Clause were accepted, a large amount of tax would be lost by the Revenue. This most certainly is not so. In 1957, the then Financial Secretary, in reply to a Question, said that the cost of relieving the whole of the stipend of the clergy from Income Tax would be about £1 million a year. This is not a proposal to exempt the whole of the stipend of the clergy from Income Tax, but to exempt merely a relatively small sum which clergy receive annually out of the goodness of heart of their parishioners. What we are talking about now is only a small fraction of that sum of £1 million. It is probable that this concession would cost the Revenue not more than £100,000.

There is another reason why this matter should be considered again, because the facts are not as they were when the matter was last debated. In 1960, the then Chancellor of the Exchequer, recognising the strength of feeling on this matter, made a small concession to the clergy in relation to Schedule A tax on houses occupied by ministers of religion.

That was at the time a special concession granted to ministers of religion against the general Schedule A practice, but, now Schedule A tax has been abolished, this has ceased to be a concession. Therefore, the clergy have lost a concession compared with other people which was granted to them in 1960.

One point which may be made in the debate is that the Churches themselves should face up to their duties in making more adequate provision for the remuneration of the clergy. That is a fair and justifiable point for hon. Members to make. If it should be that this debate leads all of us and Christian people generally to be more generous and sacrificial in support of the ministry the debate will have served a useful purpose whatever its outcome may be, but I submit that the Government cannot argue that because the clergy are sometimes underpaid there is no reason for making a tax concession which, on the merits of the case, I believe to be fully justified.

The State itself recognises that immunity from tax is justified in certain cases, such as that of a person who is in receipt of a disability pension from the State. Therefore, it cannot be said that if this concession is made we are breaching a universal principle and making a departure from a rule to which there are at present no exceptions. No one can deny that we live today in difficult and challenging times. Religion and morality are being both assailed and neglected and the spiritual standards and values which alone can make a people great are being increasingly thrust in the background. Our clergy of all denominations labour under great difficulties and manifold discouragements. Most of them give of their very best to the service of God, at great sacrifice and at the cost of much personal hardship which falls not only upon them but upon their families.

We have the opportunity, at a trivial cost to the Exchequer, to remedy a longstanding injustice and to bring a little encouragement to a body of men who would be reluctant themselves, no matter how great their need, to plead their own cause. The principle of the new Clause is one which I hope and believe will commend itself to all our hearts.

Mr. W. H. K. Baker (Banff)

It is usual when addressing the Committee to declare any interest which one may have. I cannot, or course, declare a pecuniary interest in this matter, but it is right to say that I have a family interest in it in that I have two brothers-in-law who are parsons in the Church of England and my stepfather is also a parson. In their eyes I dare say that I am a black sheep. I wish to put the case for the new Clause and I shall address my remarks particularly to the matter as it affects parsons of the Church of England, because it is their case that I know best.

Basically, the problem resolves itself round the question whether Easter offerings are remuneration, or whether they are gifts. Although there is a mention in the rubric of the 1682 Prayer Book I have ben unable to find the derivation of the custom of giving an Easter offering or, indeed, a freewill offering. According to Chambers' Encyclopaedia, Easter offerings are customary sums which have been paid from time immemorial and which used to be recoverable as small tithes before justices of the peace. The Dictionary of the Christian Church defines a benefice and says that it under canon law came to imply an ecclesiastical office which prescribed certain duties or conditions for the due discharge of which it awarded certain revenues. These duties included showing due solicitude for the moral and spiritual welfare of the parishioners.

I firmly resist the temptation to go into the question of the stipends of clergy and ministers, but the first person whom individuals or families think of when they meet disaster is the local parson or minister. He is the man who looks after their spiritual and moral welfare, and in my submission Easter offerings are gifts which are in no sense a payment for services rendered. As such, they should not bear tax.

Payments of any sort demand a receipt. A parson or minister receiving Easter offerings or free will offerings via the plate in church cannot possibly know from whom the individual sums have come and, therefore, it is not possible to render a receipt other than gratitude for what has been given. I am certain that the majority of the laity if they knew of the tax position would undoubtedly think of the Easter offering as a gift. As my hon. Friend the Member for Wimbledon (Sir C. Black) has stated, the principle of double taxation is involved here and to most people in the United Kingdom that is positive anathema. The money which is put on the plate has already been taxed at the hands of the donor.

If we allow this state of affairs to continue we are perpetrating, with the connivance of the Exchequer, a confidence trick against certain minorities. Parsons and ministers are treated for National Insurance purposes as being self-employed. Under the Finance Bill, National Insurance contributions are no longer allowable for tax purposes and, therefore, another burden is thrust on the backs of the hard-working and excellent men of the ministry.

I hope that the Exchequer will stop being mealy-mouthed about this. No doubt the excuse will be made that the new Clause would be unfair to others. The Government have been asked to tax gambling. They say that it is too complicated to tax gambling winnings, but apparently it is easy enough to tax Easter offerings simply because parsons and ministers are honest and they declare them in their tax returns.

What would be the cost to the Exchequer if the Clause were accepted, as I hope it will be? I am sorry that I have only been able to get figures applicable to the Church of England. In December, 1964, 10,086 incumbents received Easter offerings amounting to £427,911, an average of £43 per incumbency, or 3.6 per cent. of the gross benefice income. Taking those payments at the standard rate of Income Tax, assuming that Easter offerings are taxed as earned income, the total cost to the Exchequer of accepting the new Clause would be £138,900 in the current year. If we as a nation can afford to give £3½ million to keep the United Nations on its feet, surely we can afford this paltry sum to help the most deserving people who look after our spiritual welfare.

I trust that the Government will see the injustice which is being perpetrated by the taxation of Easter offerings, and, in the name of the House of Commons and the country, I strongly urge them to accept the new Clause.

4.30 p.m.

Mr. Paul Dean (Somerset, North)

I emphasise what, to my mind, is the overriding argument in favour of the new Clause, endorsing what my hon. Friend the Member for Wimbledon (Sir C. Black) said in reminding us that there is a very special or, indeed, unique relationship between a clergyman, whatever his denomination, and his flock.

To me, it causes great offence that the Exchequer should interfere in this relationship. Those of us who make offerings at Easter or on similar occasions do so out of love and gratitude to God's special representative in our midst, and I regard it as quite wrong that, in those circumstances, the State should demand its pound of flesh out of such offerings.

Mr. Michael Alison (Barkston Ash)

My hon. Friends have put forward some formidable arguments, and, of course, some of them have been heard before in this Committee. Ever since 1908, when the Appeal Committee of the House of Lords rejected the argument that Easter offerings should be exempt from tax, Governments of every description have insisted on maintaining the rule. In the context of the present Finance Bill, however, there are some new factors to be considered, and I hope that the Minister will regard this question very much in the light of the Bill now before us.

First, there is the simple practical matter of expediency inasmuch as the Chancellor will, within a comparatively short time, find himself in possession of another £12 million as a result of the raising of a new tax. In that light, the net loss to the Exchequer by accepting this new Clause is seen to be very small indeed.

Secondly, in their new arrangements for taxation under the Bill, the Government have provided for certain exemptions and, in doing so, they have exposed two principles which are closely relevant to the case we are now considering. First, in relation to donors of gifts bestowed in various ways, the principle has been established that, when assets of small value, up to £100, are disposed of by gift, the disposal does not constitute a disposal giving rise to liability to Capital Gains Tax.

The reason for this concession is obvious. The practice of making small gifts is universal, desirable, and should not be penalised by the State. If the disposal of assets by way of small gifts is exempted on the ground that the spirit of generosity actuates the great bulk of human beings and should not be penalised, it is quite intolerable that Easter offerings should remain subject to double taxation, subject to Income Tax in the first place in the hand of the giver and subject to Income Tax again in the hand of the recipient.

I realise that gifts to the clergy are not made in terms of assets and the parallel is not direct, but the analogy is clear. The Government must ensure that the principle of lifting the penalty on small gifts is not contradicted by the continuance of double taxation of gifts made to the clergy.

The second principle is exposed by the way in which the Finance Bill deliberately and specifically treats those who own or receive assets which they dispose of. In the main part of the Bill relating to the Capital Gains Tax, the principle is established that disposals of tangible moveable assets, that is, chattels, of value below £1,000 shall not be susceptible to the Capital Gains Tax. It is interesting to reflect on the categories of person having the benefit of this exemption. They do not include the clergy, alas, but they include such people as farmers and breeders of animals who, quite properly under the Bill, can regularly, year by year, dispose, for instance, of a racehorse, a prize pig or other animal—of assets—below the value of £1,000 on which they can make an untaxed gain. In this way, such people can secure a regular yearly tax-free income. The Bill explicitly provides for such exemptions.

My hon. Friend the Member for Wimbledon (Sir C. Black) reminded us that, for the purposes of National Insurance, the clergy are treated as self-employed. I hesitate to call them sole traders, but there is a sense in which they can be regarded as sole traders. Like farmers and other traders, they should not be denied the benefit from realising an asset which is peculiarly theirs, the asset created by the use of their energies, abilities and professional qualities.

Why should the farmer be able, year by year, to dispose of an animal and realise a capital gain which is specifi- cally exempted from tax under the perfectly human and reasonable approach which the Government have adopted in drafting their Bill while another kind of sole trader, the self-employed parson, who derives his yearly benefit very much as the result of the qualities which are peculiarly his, continues to be taxed?

We can never look at the clergy's stipend in quite the same way again after the new principles introduced in this Finance Bill.

Mr. John Cordle (Bournemouth, East and Christchurch)

My hon. Friends have advanced some very powerful arguments. My hon. Friend the Member for Wimbledon (Sir C. Black) in particular set the whole matter out with great accuracy. My hon. Friend the Member for Banff (Mr. Baker) thought that it was not wise to comment on the salaries earned by clergy within the Church of England. The new Clause has been so worded as to include the other denominations and the Nonconformists.

As my hon. Friend the Member for Wimbledon has said, it will no doubt be a surprise to the nation to realise that Easter offerings for the clergy are subjected to tax. Perhaps the nation should awaken to the fact that clergy are seriously underpaid and that the average salary or stipend received by the clergy in most dioceses—I will not argue with my hon. Friend the Member for Banff about the figure of 14,000 or 15,000 clergy—is no more than £800 or £900 per annum. How, on this figure, they can run large rectories and be expected to undertake the administration of the parish is too much for considered thought.

I hope that the Treasury will consider this matter carefully. It will indeed be a happy day for the clergy if we in the House of Commons can acquit ourselves and give them this small token of our appreciation and affection for the work they do for God and for us.

Mr. Raymond Gower (Barry)

I am very much encouraged by the fact that it is the Minister without Portfolio who is to reply to the debate on the new Clause. During the years that I have had the honour of sitting in the House of Commons, in common with many of my colleagues, I have learnt to admire the hon. Gentleman's abiding interest in the work of the Christian Church and, in particular, of the Anglican Church. On the other hand, I am disturbed that on this occasion the hon. Gentleman is appearing on the Treasury Bench. I only hope that his deep sympathy will triumph over his association with the Treasury. [An HON. MEMBER: "Some hope."] I am certainly hoping.

In moving the new Clause, my hon. Friend the Member for Wimbledon (Sir C. Black) covered the ground fairly and moderately. My only disagreement with him is that he described the existing situation as a deep injustice, as though it had been perpetrated by somebody. I do not think that it came into existence in that way. It came into existence almost by accident. As we have been reminded by my hon. Friend the Member for Barkston Ash (Mr. Alison), it was only as a result of an appeal decision in 1908 that it was ruled that this kind of gift should be subject to Income Tax.

In the years which immediately followed, the burden was not, perhaps, as great. In those days, Income Tax was a much smaller item. The impact of Income Tax at a low rate was not as serious a matter. Indeed, the injustice which my hon. Friend has described has partially resulted from the gradual and progressive increase in the impact of Income Tax.

There were anomalies in the proposals that were made on similar lines in former years, the chief of them being that the proposal was, in most cases, limited merely to clergy of the Anglican Church. My hon. Friend has now presented a new Clause which would include all ministers of religion. To that extent, it has a better chance of commending itself to the Government.

This has not been a Finance Bill which has been noteworthy for its tax concessions. Rather has it been noteworthy for a substantial increase in taxation. Here, however, the Government have an opportunity, at very small cost to themselves—at an almost insignificant cost—of making a valuable concession to those who would benefit by it. Above all, it is a concession that would have a widespread appeal. This argument must be extremely persuasive with the Minister.

Account should also be taken of a matter which was mentioned by my hon. Friend the Member for Banff (Mr. Baker) and by others who have spoken. I refer to the fact that it seems undesirable that the Treasury should come between the donor and the beneficiary in this way. A clergyman or minister has no right to the amount of such gifts. The gifts may be relatively small on a certain day or they may be relatively large. A clergyman has no right to them in that sense. They are given voluntarily in the wide sense. As we have been reminded, they contain an undesirable element of double taxation while Income Tax applies to them.

Mr. E. S. Bishop (Newark)

I support the new Clause, although I must declare an interest—in name only. The hon. Member for Barry (Mr. Gower) has remarked upon his membership of the House of Commons extending over a number of years. I ask this question not to make political capital, but purely to improve my knowledge of political history. I wonder whether the hon. Gentleman will tell us why action on the lines which he is advocating was not taken in previous years, in view of the strength of the case which has been put forward.

Mr. Gower

I, like the hon. Member, very much regret that such action was not taken in former years. One reason, I suggest, is that in former years Ministers on the Tresaury Bench have been able to say that similar new Clauses were anomalous because they referred for the most part only to Anglican clergy and would confer no similar benefit upon ministers, for example, of the Established Church of Scotland or of the Free Churches. That anomaly does not now apply.

I regret, as does the hon. Member, that this change was not made in the past. That, however, is not a sound reason for not doing something today. The case for this reform has been progressively established. I very much hope that the Minister will give an encouraging reply. It is certainly undesirable that ministers of religion should resort to the kind of subterfuge, innocent though it may be, described by my hon. Friend the Member for Wimbledon.

As my hon. Friend said, this has been a time when those who advocate the maintenance of spiritual and moral values have been swimming against the tide. They have had a hard battle. The whole impact of our contemporary civilisation seems, perhaps, to be against them in those battles. It would be a bad thing for this Parliament, in what is still avowedly a Christian country, not to take this step. Let us set an example to the country at this time when there is a desperate need for such an example. Although the method proposed is modest and the cost insignificant, I implore the Minister to do it.

The Minister without Portfolio (Sir Eric Fletcher)

Perhaps it would be for the convenience of the Committee if I were to intervene at this stage and indicate my reaction to the speeches which have been made in support of the Clause. I need hardly say at the outset that perhaps no one could be more sympathetic than I am in my approach to this subject, which is of perennial interest.

4.45 p.m.

I recall having taken part in a number of previous debates on the subject and recently I took the opportunity of rereading some of those debates. In one form or another, this cause was argued with even greater eloquence on earlier occasions, not least of all by yourself, Dr. King, in a number of notable speeches.

The Chairman

Order. It is not in order to pray in aid the Chair for or against any Question which is before the Committee.

Sir Eric Fletcher

I was not craving your aid, Dr. King. I was merely reminding myself of some of the eloquence which we have enjoyed from you on previous occasions, but of which, on this occasion, we are deprived.

Incidentally, I notice that on the first occasion when I heard this matter debated, in 1946, when Mr. Hugh Dalton was Chancellor of the Exchequer and when the Clause was in somewhat more limited terms and was confined to providing freedom from taxation of Easter offerings up to a maximum of £50, there was a Division in which I voted against the then Labour Government and in support of the Clause. That is not an encouragement to any of my hon. Friends to vote against the present Government in somewhat different circumstances.

Propositions have been repeated this afternoon with which we all agree. First, we all agree that many clergy are very much underpaid. It is a near disgrace that so many members of the ministry in all denominations live with their families in very straitened circumstances. They are probably the most impoverished section of the community. They have not had the opportunity to raise their standard of living in this affluent society to anything like the same extent as most other sections of the community. Surely we all agree that they are a body of devoted and dedicated men rendering conspicuous service to the moral and spiritual welfare of the nation.

I could add other arguments, which have not been mentioned this afternoon, why they are deserving of any help which we can possibly give them. The hon. Member for Wimbledon (Sir C. Black) referred to various evasive devices which can he adopted, for example, by encouraging gifts of money from parishioners at Christmas or some other period of the year other than Easter. But we have to recognise that ministers of religion of all denominations are particularly scrupulous in their financial dealings and would not stoop to some devices, which may or may not be on the borderline of the law, for reducing their Income Tax liability.

Therefore, on that ground alone I would have thought that we had a duty to see whether there was anything that we could do to alleviate the conditions in which they have to work and live and do such valuable work. As you will know, Dr. King, this is a problem with which every Chancellor of the Exchequer whom I can remember has had to grapple. Sympathy about this problem has been expressed by among others, Mr. Dalton, Sir Stafford Cripps, Mr. Harold Macmillan, the right hon. Member for Monmouth (Mr. Thorneycroft), the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) and Lord Amory, and I have no doubt—although I am not sure whether he has intervened in any of these debates—that the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) had to consider this matter during his term of office at the Treasury. I, too, have had to consider whether there is any principle which requires us to adhere to what is and has been the law for some time and to see whether there is any step which we can take.

I should observe that whatever the law may be and whatever anomaly a change in the law might introduce, none of us in this Committee would wish to be hidebound by Treasury doctrine if there were a widespread popular demand throughout the country for a change of the law in this respect, or if the leaders of the three political parties were united in recommending a change in the law, or if there were anything like near unanimity on this subject in the Committee.

Unfortunately, that is not the case and it is, therefore, worth while to remind the Committee of what has been said on this subject in the opposite sense by two respected and distinguished members of the Committee. I will choose two quotations from either side of the Committee. In 1960, speaking of payments to the clergy, offertories, freewill offerings to the clergy, the right hon. Member for Wolverhampton, South-West (Mr. Powell) said: It seems clear to me that these payments are indisputably and unavoidably of the nature of income, and most of the arguments which have been used in favour of this Clause only strengthens the view that these payments are income. Neither their voluntary origin, nor the low pay of the recipients, nor the nature of the occasion on which the payments are made, nor any"—

Hon. Members

He was a Treasury Minister.

Sir Eric Fletcher

At that time the right hon. Gentleman was not a Treasury Minister, but was speaking as a private Member of Parliament. I will continue the quotation: Neither the voluntary origin, nor the low pay of the recipients nor the nature of the occasion on which the payments are made, nor any of the circumstances, alters the underlying fact that these payments are part of the income of the recipients, and would be treated as income were they similarly given to other persons. In those circumstances, I cannot feel that it would be desired by those whom we are trying to help in this way that discrimination should be made …in their favour …". The other quotation is from my right hon. Friend the present Chief Secretary, who was also speaking as a private Mem- ber of Parliament and who pointed out that he approached the matter with great sympathy as the son of a rabbi, having been brought up in very modest circumstances. He said: This is a matter of conscience. … As for the conscience of the giver, my conscience will not be mollified because a body of important persons who are doing a unique service to this country, which needs to be done now more than ever, are to be helped in this way and because my responsibility as a giver and a provider of adequate living remuneration for them is to be fobbed off on to the Treasury. If we believe that this should be done, we should do it ourselves."—[OFFICIAL REPORT, 22nd June, 1960; Vol. 625, c. 582–4.] I do not regard either of those quotations as conclusive, of course, but they indicate that there is not unanimity on this subject.

Mr. John M. Temple (City of Chester)

I know that with his natural modesty the hon. Gentleman would not wish to quote from a speech of his own, so may I remind him of a quotation of his in Committee on the Finance Bill when, speaking on this subject, he said: We have heard it said that there are administrative reasons which make such a concession difficult, that it might open the door to other concessions. I do not believe that.

Sir Eric Fletcher

I wish that the hon. Gentleman had gone on to read something else I said and which, I am bound to confess, modesty prevented me from saying. I then added: It is felt to be almost indecent and repulsive that the more generous people are to their pastors at Easter time the more goes into the Chancellor's pocket."—[OFFICIAL REPORT, 1st July, 1957; Vol. 572, c. 839.] I do not resile in any way from what I said at that time. The hon. Gentleman has been good enough to refer to what I said about the administrative reasons.

Sir Harmar Nicholls

We are not quite sure yet how the hon. Gentleman will come down on this question. His words so far have given us hope and have then dashed us down. But the quotations he has given are from the past and I do not think that he can deny that thus far in the debate there has been unanimity in support of the Clause and that he has to go to the past to destroy that unanimity.

5.0 p.m.

Sir Eric Fletcher

We have not yet come to the end of the debate. I shall wait with interest what the right hon. Gentleman the Member for Handsworth has to say about it.

I do not regard, in this or any other context, the failure of the Tory Government for 13 years to deal with this subject as being in itself an excuse for our not dealing with it if we thought it were the right and proper thing to do. I am, therefore, anxious to hear today what hon. Gentlemen opposite have to say now that there are a number of ex-Chancellors here with experience at the Treasury.

I would like to hear whether they, with their experience, are proposing to support the Motion with their vote in the Division Lobby, because I think that would be a very important factor. They are on record as to what they have said in the past. If they take the view that circumstances have changed today, and take the responsibility of wishing to support this in the Division, that, obviously, would be a factor of considerable influence with my right hon. Friends and I shall wait to hear what is to be said today.

Sir Edward Boyle (Birmingham, Handsworth)

The right hon. Gentleman will certainly have our views in due course. The right hon. Gentleman is now a member of the Government and he is a Minister advising this Committee. I think that we are entitled to hear from him what he thinks of the quotations of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and the present Chief Secretary which he has read out. Is he advising this Committee simply on the basis that the views of the Committee have not been unanimous on this subject? Is he merely making use of these quotations to that purpose, or does he mean more? I think that before the right hon. Gentleman hears my views we are entitled to know what is the advice the Government are to give about voting on this Clause.

Sir Eric Fletcher

I was coming to that. Obviously, I was not proposing to ignore it. It is my duty to remind the Committee, before it comes to a conclusion on this matter, of the objections that have been made by Labour and Conservative Chancellors during past years. The Committee has to weigh in the balance the arguments that have been advanced by hon. Gentlemen opposite and these views, which are the Treasury's views that have been expressed time and again. They are slightly different on this occasion because the form of this new Clause differs, as the hon. Member for Wimbledon will appreciate, and as I think he observed, from terms of somewhat similar Clauses that have been introduced in the past, limited to the case of Easter offerings and limited sometimes to a particular pecuniary amount and I think sometimes not including all Christian demoninations.

The test must be whether these payments made to clergy of any denomination, whether at Easter or any other time are made to them by virtue of their office. If they are, then they are different from the kind of gifts made to personal friends and they come within the ordinary code of Income Tax or emoluments, fees derived from the holding of an office.

The next point to be considered is this. Suppose it were the fact that the Committee decided to exempt all clergymen from tax on voluntary offerings. It would then be necessary to see whether justice could be done to both those clergymen of the Church of England who receive Easter offerings by tradition going back for many years, as well as to the ministers of the Free Churches who are remunerated in a different way.

The system in Scotland, in the Methodist Church and in other denominations is that collections are made and they very often go into a central fund out of which the expenses of the church are paid, including the maintenance of the church, the remuneration of the ministers and the sundry expenses relating to the running of the organisation. If justice were to be done it would be necessary to allocate a part of those voluntary contributions made week by week to a central fund to see how much of this was referable to the salaries that eventually found their way into the hands of the ministers.

There is a further point.

Mr. Kenneth Lewis (Rutland and Stamford) rose—

Sir Eric Fletcher

Experience shows interruptions are not really helpful if they merely anticipate points which one intends to deal with.

The hon. Member for Wimbledon and others have indicated that the position is different today from what it was in the past and the hon. Member for Wimbledon referred specifically to the fact that whereas formerly clergymen had the benefit of being exempt from Schedule A contributions, since Schedule A has been abolished they can no longer claim to have that benefit.

That is not the end of the matter. As a result of some of these earlier debates on this subject, I think it was Lord Amory who introduced the provision in Section 20 of the Finance Act, 1961, which first gave all full-time ministers of religion, irrespective of their denominations freedom of Income Tax under Schedule A in respect of their official residences.

I appreciate it can be said that since Schedule A has been abolished that is no longer a concession available to them. That was not the only concession. In 1963, beneficial occupiers other than owner-occupiers remained liable to tax on the value of the house that they occupied. Ministers of religion are not owner-occupiers. They do not own the vicarage, the manse or the other house in which they live. In the ordinary case they would, therefore, have been liable to tax on the value of such a house, but it was expressly provided, as a result of a debate somewhat like this, by paragraph 19 of the 12th Schedule of the Finance Act 1963 that the parsonage house or any official residence provided for a full time minister of religion shall be treated as occupied otherwise than by the holder of the office". If it were not for that provision a minister of religion would be liable to tax in respect of the value of the house he occupies. There is a further aspect of the matter which I think should be borne in mind by the Committee. As everybody knows the system is growing of making payments to charity by covenant. There is also an increasing tendency, certainly in the Church of England, and I think in other churches, to encourage voluntary payment to church organisations, not so much by collections on Sundays and other days but by free will offerings during the year of stated promised moneys. There is also the growing practice of encouraging parishioners and members of other congregations to make their contributions to the maintenance of the church of their allegiance and, therefore, to the support of the minister who administers to them by freewill offerings of that kind.

To the extent to which they are being paid by way of covenant, which is becoming increasingly common, the donors and the recipients derive the full benefit available from the Exchequer to those who enter into covenants, which enables payment to be made and tax to be recovered and therefore, enables people to give more generously for religious purposes than perhaps they would otherwise do.

Sir C. Black

Surely the point which the hon. Gentleman has made operates in exactly the opposite sense to his argument. Before the Budget, if people entered into a seven-year covenant, as many do, with their vicar personally to make a payment, they were entitled to tax deduction and they had relief from Surtax in the case of a covenant to an individual. In this Budget the Government have taken away the Surtax concession which formerly existed and have made it much less likely that vicars will be in receipt of that kind of assistance.

Sir Eric Fletcher

The hon. Gentleman has not appreciated what I was trying to say. It is perfectly right that Surtax relief under a covenant to individuals is no longer available. But will the hon. Gentleman apply his mind to this. The Income Tax relief on a covenant for charitable purposes is still available. In so far as there is a payment under a covenant to a religious charity, even though part of the funds of that charity is used for the payment of the stipend of the vicar or minister of religion, the Income Tax relief is still available.

In the case of the Established Church of Scotland, and I think the Methodist Church and others, where the ministers of religion are remunerated from the central fund, in so far as people choose to make their contributions to those religious charities by covenant, the fact that a substantial part of the covenant goes to remunerate ministers of religion does not deprive them of the benefit of Income Tax relief.

I do not suggest that this should be encouraged to any great extent, but in so far as one is seeking to find means whereby, as hon. Members have advocated, the Treasury can assist in the voluntary efforts of people of good will and religious feeling to support their churches, it is important to bear this in mind as a very substantial contribution which the Treasury makes.

There was a time earlier in our history when part of one's income was made available, with the apparatus of the State, to the Church. That is no longer the case. Those who wish to make religious contributions are free to do so. It may well be that in so far as some of the clergy are inadequately remunerated it is the fault of the laity which does not give sufficiently generously and has not realized the additional responsibilities and expenses falling on ministers of religion. I hope that, if it has done nothing else, the debate has made some of us more aware of our responsibilities in that direction.

5.15 p.m.

I conclude by adopting the words uttered by Lord Amory when he was Chancellor of the Exchequer, on 6th July, 1960, in answering a debate of this kind: I have made up my mind that I will try to carry my responsibilities a little more seriously in this respect as a humble member of the Church of England than I have done hitherto."—[OFFICIAL REPORT, 6th July, 1960; Vol. 626, c. 489.]

Sir C. Black

I understood the hon. Gentleman to say that one of the difficulties which the Government saw in making this concession was the absence of agreement, and I think that he suggested that the situation might be different if the leaders of the three political parties in the House of Commons were in agreement with this proposal. If between now and Report I can obtain such agreement, may I take it that he will recommend hon. Members to accept a new Clause such as this?

Mr. Geoffrey Hirst (Shipley)

I am very grateful to my hon. Friend the Member for Wimbledon (Sir C. Black) for proposing his new Clause to exempt from tax Easter offerings and other offerings of thanks to ministers of religion. He made an exceptionally good case for it, by far the best that I have heard in the Committee. I cannot say that I am terribly impressed with the reply of the Minister without Portfolio. Some of us have discussed the new Clause, and I have supported similar proposals on innumerable occasions. I have heard many arguments for them, good, bad and indifferent. I am sorry to say that I felt that the longer the Minister's speech lasted the worse his argument became, otherwise I leave classification to hon. Members' own judgment.

If back-bench Members want something, there are all sorts of Treasury briefs and arguments about why they cannot have it. If the Customs and Excise or the Inland Revenue want something, the average Chancellor of the Exchequer has a great deal of difficulty in resisting the pressure. If the Government want something strongly enough and it is Cabinet policy to get it, there are always arguments adduced by the Inland Revenue or the Customs and Excise, or whoever is concerned, as to why it is possible to accede to it when over the last 20 years it was impossible to do so. I have seen this time and again.

I am sure the Minister cannot honestly believe that there is not an element of consent in the country for this unique case. No doubt he has spoken from a Treasury brief to a great extent, but I am sure that he is sincere in his personal views about the desirability of meeting this case. Obviously, sitting on the Treasury bench, he is in a difficulty, but he cannot seriously believe that there is not a wide measure of consent in the country to meet the case which my hon. Friends have made for the new Clause, which has been made many times before. The fact that it has not been accepted in the past is not a very good argument. Variations on the new Clause have been put forward before. Certainly there has never been a new Clause which went as far as this one to meet the many difficulties in this matter.

It might still be argued that it would not be right to accept the new Clause, and that to do so would open the door to exempting other matters. The question is: does the country think that ministers of religion should have this form of gift? One can argue about whether it is income until the cows come home. No doubt it is income in the sense that a self-propelling advertising pencil given to me at an exhibition is income. The point is that the person who gives this type of contribution to a clergyman is endeavouring to make a personal gift out of appreciation for the innumerable services which he gives which are far beyond what any ordinary duty would require in the average walk of life. He feels distinctly hurt that, one after another, Governments—and I have criticised all Governments about this matter—have failed to appreciate that here is an instance in which there is an element of consent and desire in the country to recognise the services rendered by ministers.

This is one occasion when the Inland Revenue should be overruled, as indeed it is often overruled. What a bad time it has had on this Bill up to now. My hon. Friend the Member for Wimbledon has met nearly all the arguments which have been adduced before. What he said about the contractual argument was very reasonable and shows just how thin that argument is.

Most of the Minister's arguments were Aunt Sallies dug up from old speeches in order to be knocked down. They did not meet the wish of the Committee as expressed today. Least of all did they meet that element of consent in the country which would allow the Government to overrule the red tape and other peculiarities of the Inland Revenue. I have seen the Inland Revenue overruled time and again. When we in this Committee have sought concessions we have often been told that they were quite impossible, only to find that the Government have eventually taken a certain decision with the result that the rules have been swept away. The whole of the case has then collapsed like a pack of cards. It is time that it collapsed today.

Sir Charles Mott-Radclyffe (Windsor)

Most of us who listened to the Minister without Portfolio could not but feel some sympathy for him. We remember the eloquence with which he supported many of us on both sides of the Committee in former years when this matter was discussed in a slightly different form. He is now in a difficult position. He is not at his happiest in defending a case which, I think, he does not believe in. It would have been better to have allowed one of his right hon. or hon. Friends to do the job. There is no doubt in our minds, recalling previous debates, as to where his sympathy lies.

I am not very impressed with the purely technical argument as to whether the Easter offering or voluntary gifts at any other time of the year by parishioners to their clergymen are or are not income. That is hair splitting. It is not the argument that the Treasury has to meet. The argument for exempting the Easter offering or any other voluntary gifts is not solely based on the fact that the clergy as a whole are grossly underpaid or that, as a body, they have felt the draught perhaps more than any other body in the last 20 years. Neither is the argument based on the fact that a great many clergymen, certainly in country districts, are living in huge Victorian vicarages with acres of ground unkempt.

All these are, of course, arguments in favour of making this concession. But they could be met by the counter argument that it is for the Church and the laity to rearrange the financial situation of the clergy, who deserve to be better paid and looked after, and not for the Treasury to do so. I concede that point but it is not the real argument. Here I declare an interest. It is not, of course, financial. I have for many years been a rector's warden and I know something of the problem of collecting the Easter offering and of what one does with it. It is a fact that the more money put into the plate on Easter Sunday the less the incumbent gets. This is where the ridiculous anomaly arises.

There is no compulsion about this. Although it is a convention—and properly so—that the Easter offering is given to the incumbent annually there is no compulsion about it. It is within the discretion of the church wardens to do what they like with the Easter offering, although, in 99 cases out of 100, quite properly they give it to the incumbent.

I beg the Treasury to understand the absurd situation we are in. Lord Amory, as Chancellor, gave a concession on Schedule A on parsons' houses, but that concession no longer has any special value to the clergy because no one now pays any Schedule A. In trade union terms, the clergy have lost a differential and there is no one apart from us to talk for them.

The hon. Gentleman's argument that there ought to be agreement between the leaders of all three parties on what to do about the Easter offering is not very strong. Have he or any of his colleagues since this new Clause was put down consulted the leaders of any of the Churches? The argument that we cannot accept the new Clause because there is not a unanimous view amongst the leaders of the three parties in this Committee is the most extraordinarily weak argument I have ever heard.

If people of any parish like to give their parson a turkey for Christmas the value of the turkey is not assessed for tax. If they like to collect enough money to give him so that with it he can buy a turkey for Christmas, that money is not assessable for tax. If they like to combine and pay half the annual cost of running his motor car, that money is not subject to tax. If they like to combine together in a different way in order to pay for a holiday for the clergyman and his family every year or every other year, that money is not subject to tax.

Yet every time any parishioner, as a gesture of good will for all that the parson may have done for him, puts £1 or 10s. or half a crown on the plate on Easter Sunday, it is not only subject to tax for the incumbent, but has, indeed, already borne tax by the person making the gift.

Mr. R. J. Maxwell-Hyslop (Tiverton)

Surely if the parishioner chose to give the clergyman an Easter egg with money inside instead of chocolate it would not be taxed.

Sir C. Mott-Radclyffe

The value of the Easter offering is in most cases almost incalculable. There may be a few large parishes in big cities where one can ascertain with reasonable certainty what the value might be but in most parishes it is impossible to calculate as between one year and another. Populations come and go. They change enormously. How much money is put into the plate on Easter Sunday may well depend on whether Easter is early or late in the year, whether the day is wet or fine or on whether the parish is near a holiday resort, in which case many holiday makers may go to church and, therefore, the Easter offering might increase. If the parish is not near a holiday resort or the weather is bad then the sum received will be greatly decreased.

These things are incalculable. It cannot be seriously argued that when an Easter offering varies, as it often does, by as much as 50 per cent. as between one year and another, it is technically income which should bear tax.

The Government have quite rightly made a number of concessions in the Bill, including a number of exemptions. Amongst the exemptions are gains acquired by gambling. These are exempted from Capital Gains Tax. I do not complain of this but it is a curious state of affairs under a Labour Government, in view of some of the things they said not so long ago, that any amount of money that one can make at gambling goes tax free while 5s. put into the plate on Easter Sunday as a small token in regard for services rendered should be subject to tax.

5.30 p.m.

Sir E. Boyle

In view of his speeches in the past on this subject, I appreciate that this afternoon the Minister without Portfolio felt some slight embarrassment in taking part in this discussion. I think he delivered a rather curious speech, because he had a good deal to say about the views of the Opposition Front Bench, and I shall be clear in my reply what these are. The hon. Gentleman had some exhortations to make at the end of his speech about Christians performing their proper duties and contributing voluntarily to clerical stipends, but I do not think he gave the Committee very clear guidance on how to vote on the new Clause.

It seems to me that this is a subject on which the Government of the day, whoever they may be, must give a lead. In 1960, when my right hon. Friends the Member for Monmouth (Mr. Thorneycroft) and Lord Amery, as he now is, replied to a debate on this subject, they did—I agree amidst a certain amount of dissent—give a clear lead on how they thought the Committee

should vote. I shall try to tell the Committee clearly what I think about this and how we ought to proceed on this question, although it must ultimately be for the Government to advise us.

We have had a number of debates on this subject since the war. I have been a member only since 1950, but I can recall the debates on this subject in 1957 and the debate in 1960 from which the Minister quoted. In 1961 I think many hon. Members rather hoped that we had laid the matter to rest with the quite important concession which my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) made about parsonage houses. He brought in a Clause to provide that where any minister of religion, by virtue of his office, lived in a house which belonged to him as incumbent, or was owned by his church, he should be treated for tax purposes as though he was a representative occupier and, therefore, not liable for Schedule A. It is worth remembering that not only was that at the time thought to be a valuable concession to the clergy, but it was a concession which had been strongly urged on the Chancellor by the Churches' Main Committee. It was one for which the Churches had asked.

I was a little concerned at the way in which many hon. Members this afternoon expressed the view that the value of what my right hon. and learned Friend did had been completely nullified by the abolition of Schedule A. It may be, as has been said, that the clergy has lost a differential, but surely it is odd that we should take that line so strongly in a debate about the clergy which is perhaps hardly in accord with the tough parable about labourers in the vineyard. The fact that Schedule A has been abolished for others does not alter the fact that the clergy are in a more favourable position than they were before the 1961 Budget in this regard.

We are discussing a new Clause, which was moved with his customary clarity and sincerity by my hon. Friend the Member for Wimbledon (Sir C. Black), which says: Easter or other similar offerings made to clergymen or other ministers of religion shall not be regarded as income for any of the Income Tax Acts for any future year of assessment. It is fair to say that this new Clause is not very different from the one which we debated in 1960, which referred to the earnings of clergy and ministers of religion of all denominations so far as they were derived from the voluntary offerings of their congregations.

I have something else to say to the Committee, but for myself I should feel unable to vote for the new Clause, for two reasons. The first is the reason, which the Minister without Portfolio quoted, given in 1960 by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). I shall not read it again, but I think that that statement by my right hon. Friend was characteristically clear-cut and definite. It was made when my right hon. Friend was a private Member, and, incidentally,—and I hope that I shall not be out of order in mentioning this—when he was chairman of the finance committee of my party and was playing an active part in our Finance Bill debates.

There is another reason, which was also mentioned in that debate, by Lord Amery, and which seems relevant to this new Clause. However keen we may be to do something for the clergy, I believe that a new Clause of this kind will not work out in an altogether equitable way between one clergyman and another. This is not just a denominational matter. I do not believe that it will work out equitably, for the reasons which Lord Amery then gave, and perhaps I might quote a short passage from his speech because I think that it is relevant to the new Clause.

He pointed out, as did my right hon. Friend the Member for Wolverhampton, South-West, that on a number of occasions it had been held that voluntary offerings of all kinds were income, and he then said: Coming to ministers of religion, nearly all clergymen obtain part of their income in the form of voluntary offerings. I understand that many ministers of the free churches receive most of their income, in some cases all their income, in that form. In many cases the voluntary offerings are not made direct to the clergyman in the parish but are made to the central fund, and then payments are made out from that to clergymen whose stipends particularly need supplementing. Therefore, voluntary offerings of this kind are a more complicated matter than appears at first sight. If all voluntary offerings were exempted, some very strange anomalies would arise in the treatment. A clergyman whose income was £800 a year, largely composed of voluntary offerings, would pay very little tax indeed, whereas a clergyman whose stipend of £800 was paid otherwise than by voluntary offerings might pay a substantial sum in tax."—[OFFICIAL REPORT, 22nd June, 1960; Vol. 625, c. 585.] My hon. Friend the hon. Member for Wimbledon this afternoon rightly said that he was keen to produce a new Clause which was, as it were, equally fair as between denominations and was not biased in favour of one denomination or another, and that was why he referred to "Easter or other similar offerings". But it seems that the words, "other similar offerings" are rather wide in their incidence, and therefore there is the difficulty, which Lord Amory mentioned in 1960, which arises as soon as one starts bringing into the discussion a large band of voluntary offerings made by parishioners and others who wish to reward their clergy.

Sir C. Black

I think I made it clear at the outset that the new Clause was drafted by me with the aid of some of the precedents. I am neither a lawyer, nor a Parliamentary draftsman, and I made it clear that I thought the Clause might need to be altered substantially to give effect to what we had in mind. I think that my right hon. Friend is fair in making the point that he did, but I do not think that it destroys the principle that we are trying to establish.

Sir E. Boyle

I am glad my hon. Friend realises that I am trying to be fair about this. I am merely pointing out a real difficulty which I think faces almost any new Clause of the sort that we have had at intervals on this subject in this Committee. If one tries to bring in a wide band of voluntary offerings, one gets the difficulty to which Lord Amory referred. It is a very real difficulty, and it explains why, in 1960, Lord Amory expressed his desire to explore other possibilities; and it was that desire which led to the concession which my right hon. and learned Friend the Member for Wirral made in 1961.

Mr. Gower

Even though the new Clause has been fairly loosely drawn, may I ask my right hon. Friend whether he has taken account of the fact that the term "Easter offering" is clearly defined and has a definite and specific meaning? The expressions "other similar offerings" is very loose, but under the well-established principle of ejusdem generis they are analogous to an Easter offering in another kind of church.

Sir E. Boyle

I ask my hon. Friend to look at the quotation from Lord Amory's speech, because I think that this is a more difficult matter than he supposes.

Having explained why I feel unable to support the new Clause, I should like to put two final points to the Committee. There are only two ways in which to proceed. The first is to see that the Chancellor of the Exchequer is made fully aware of the strong views which have been expressed this afternoon and to express our hope that before the next Finance Bill it will be possible for him to have discussions with the Churches' Main Committee to see whether there is some possibility of giving assistance here, like the possibility which opened itself up in 1961.

Incidentally—I do not say this dogmatically; if my recollection is at fault, I am sorry—I have always understood that the Churches' Main Committee was not particularly strongly in favour of the new Clause, and much preferred the suggestion of my right hon. and learned Friend the Member for Wirral. I hope, therefore, that it will be possible for the Chancellor to have further discussions with that body. If there is no new proposal of that kind I say that there is only one thing that we can do about this, if we and the Government decide that something should be done. I would much rather give a straight tax relief to the clergy—all above board—than attempt to put through a new Clause on these lines, which I do not believe will be satisfactory. I can see objections to it.

I am not advocating this course, but I say that if the House and the Government decide that something further should be done for the clergy in the way of tax relief, and if nothing presents itself which is analogous to what we did in 1961, I would rather consider a straight tax allowance than a special allowance which might well work out unfairly as between one clergyman and another.

Mr. Norman St. John-Stevas (Chelmsford)

I shall detain the Committee only for a few moments. I had not intended to speak, but I felt impelled to do so by the rather unfavourable comments made by my right hon. Friend. One of the principal arguments he produced against the new Clause was that its effect would be inequitable as between various clergymen—that one clergyman might benefit more than another. But that is the principal argument for the Clause. These gifts are not remuneration as such; they are expressions of personal appreciation for services rendered, and they will naturally vary from individual to individual. In the latter part of his remarks my right hon. Friend said that he hoped that there would be discussions with the Churches and the Treasury. All I say to that is that Hope deferred maketh the heart sick. Finally, my right hon. Friend suggested that there might be a tax allowance of some kind. There is something to be said for that, but it seems to me that my right hon. Friend hedged his support for it with a number of reservations. In any case, no such proposal is before the Committee, whereas the new Clause puts forward a concrete proposal in respect of Easter offerings. From the Minister without Portfolio the clergy were offered personal sympathy, and the sympathy of various distinguished and not-so-distinguished former Chancellors of the Exchequer. What is required is not sympathy but a tangible expression of it in a measure of tax relief.

I find the Minister's arguments rather extraordinary. He says that the Clause cannot be accepted unless it can be shown that there is a virtually unanimous popular demand for this reform, backed up by the unanimity of the leaders of the three parties in the House. Would he apply that argument to the other Clauses in the Bill?

Mr. Hirst

Would he apply it to close companies, for instance?

Mr. St. John-Stevas

If not, why not? Why single out this Clause?

The question we have to ask is not whether there is unanimous support for the Clause in the country, or a favourable concensus of opinion among the leaders of the parties; it is whether or not this is a just measure. That is the criterion of justice which should guide the Minister in his considerations.

He produced a number of arguments which I did not find convincing. First, there was the argument that these gifts arose from the office, as such. I have already pointed out that that is not so, and that these are personal tributes of appreciation to dedicated and zealous men and will vary directly in proportion to that dedication and zeal.

A further argument was that some denominations produced no Easter offerings, but remunerated their clergy on another basis. That may be so, but that is not an argument against the tax relief which is asked in respect of Easter offerings, because such collections are in a quite different category.

Finally, the hon. Gentleman said that a measure of tax relief was given in respect of covenants. That, again, was a powerful argument in favour of the Clause. If tax relief is given in respect of covenants, the non-existence of tax relief for these offerings becomes more anomalous than ever. I therefore hope that the Minister will abandon what I consider to be a rather legalistic approach and will regard these gifts as what they are, namely, free gifts which are given in a spirit of charity to dedicated men.

I hope that he will take note of the almost unanimous opinion expressed in the debate and will give the matter further consideration. If he does so he will earn himself an honoured if small niche in the ecumenical movement, and also earn the gratitude and good wishes of many hon. Members.

5.45 p.m.

Sir Eric Fletcher

I am sure that many hon. Members wish to press on with our other business. [Interruption.] I still think that many hon. Members would like to proceed with the other business that we have to do today. I thought that it might help the Committee if, in reply to the right hon. Gentleman, I said that the Treasury Ministers will at any time be ready to consider any representations made on this subject by the Churches' Main Committee. I hope that with that assurance—that if we pass from the matter today it will not necessarily be the end of it—we can pass on.

Mr. Heath

Does the Minister without Portfolio mean that he is in favour of the Churches' Main Committee discusing these matters with him, and that he will consider the matter further with any members of the Churches or of this House?

Sir Eric Fletcher

I shall be happy to consider further representations on this subject which may be made by any hon. Member.

Mr. Kenneth Lewis

I have sat through the debate and I want to make one or two points. It would appear to those back benchers who are in favour of some action being taken on this subject—and some of us have been pursuing the matter for years; I made a speech on it in 1960—that both Front Benches are against us. I am surprised to find that my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) appeared to have such unanimous support. He got support from both sides of the Committee on at least one point that he made.

Mr. Heath

I would like to make it clear to my hon. Friend that he does not have his own front bench against him. We are discussing the best way to handle what is admittedly a very difficult and complex matter.

Mr. Lewis

I have listened to the speech made from my Front Bench, and I did not gather from it that it was likely that there would be support for the new Clause.

I do not wish to suggest that there is no sympathy on either Front Bench for the principle involved. However, this has been discussed now for a number of years, and we have had expressions of sympathy from both Front Benches from time to time as Budget has followed Budget. Nothing has ever been done about it. The fact remains that, whatever the Treasury may say about the amount which is contributed in an Easter offering being income, the people who provide the gift on Easter day to the clergy look upon it as a gift. They do not look upon it as income or as in any way an addition to salary.

In the first place, of course, the amount given can vary and may be large in one church and small in another. My right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle) indicated that there was some difficulty because clergy of certain denominations receive most of their income from voluntary gifts. I think that the right hon. Member the Minister without Portfolio also mentioned, in the same terms, that salaries are provided for the clergy wholly out of collections. It would be exceptional in any Church that some clergy did not have a fixed salary.

Therefore, whether the clergyman's income comes out of voluntary collections or whether it is paid otherwise, as in the Church of England, it is certainly at a rate fixed by the church council or by the board of managers of the church at the beginning of the year or when the clergyman is appointed. Therefore, anything paid in the way of gifts is not part of the regular income of the clergyman. It is an extra.

It has been said on previous discussions on this matter that there are instances of people who receive income which is not taxed. We have the example of the cricketer who receives a benefit. He receives large sums of money—hundreds and sometimes thousands of pounds—and this is completely tax-free. There is, in my submission, another very good example. There are many people in this country who work on the basis of receiving a taxed salary plus gifts in the form of tips. I do not want to suggest that a gift to a clergyman is in the form of a tip—it is a gift—but many people receive amounts and the Treasury finds difficulty in assessing what those amounts are. What happens? The tax inspector arranges that a certain amount is fixed and that this amount is assessed as the income in the form of tips and that what is received over and above this amount is then completely tax-free to the recipient.

I would suggest that there is a perfectly easy way out—

Sir Douglas Glover (Ormskirk)

My hon. Friend is not quite accurate about the tips, because a person who receives tips declares them as part of his income.

Mr. Lewis

The fact remains that the Treasury has always had difficulty over this. Therefore, the tax inspector has fixed an amount and above that amount no other questions are asked.

I would suggest that there is a way out for both Front Benches on this, if this matter is to be considered in future, though one appreciates that there are difficulties—that is, that they should say that the first £50 of any amount received in an Easter offering or annual collection made for the clergy should be tax-free and that above that amount it should be liable for tax. This would have the advantage of covering many of the Easter collections and other collections, because the average is said to be about £43. It would cover most of them and it would have an added advantage in that those clergy who are better placed to get larger offerings would not get the advantage of a large amount of income free of tax.

I ask that, by Report stage, or, at any rate, at some time in the future, this should be looked at. The Minister without Portfolio said that there was no popular demand for this. If this were conceded by any Government, it would be received—this is non-political—with great popular acclaim, not only by those who regularly attend Church, but by the general public.

Sir D. Glover

I am not at all surprised that the Minister without Portfolio and my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle)—who have experience of Treasury affairs—or any other ex-Chancellor, do not want to allow Easter offerings to be free of tax. After all, this is about the only good money the Treasury ever receives: it has at least been blessed before they receive it. I can, therefore, understand Treasury Ministers always wanting to keep this tax, so that their hands are clean from time to time.

However, this is a much more difficult problem. I think that speeches today have shown that even those of us who support this Clause have a very wide divergence of views as to how this matter should be tackled. Some say that the Easter offering should be entirely exempt from tax. My right hon. Friend said that, in the Nonconformist Churches, they do not have an Easter offering and remuneration of the parson is not aggravated in the same way as that of parsons in the Church of England, so there is an obligation there.

My hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) suggested that £50 should be free of tax. Another argument is that this is not income because the better the priest, the higher the Easter offering. In other words, if I have a moderate priest, I put half a crown in the plate. If I have a good one, I might put £5 in the plate and think myself lucky to have him. It is my way of showing appreciation.

My hon. Friend now says that if a priest in one church is not very popular but the priest in another is, the first man will pay no tax on the £50 which is all he will receive and the second man, who receives £200, will pay tax on £150.

Mr. Kenneth Lewis

My hon. Friend must appreciate that there are some extremely good clergy working in very difficult areas where it so happens that they have poor and small congregations.

Sir D. Glover

I accept that. My hon. Friend is perfectly right in his argument, but it shows that there is a difficulty in bringing justice into this Clause. For the first time in 15 days, I have something complimentary to say to the hon. Gentleman. He gave an extraordinarily poor reply, but at least, at the end of our discussion, he said that he was prepared to listen to any representations made by the Churches. I gather that this applies to any body or any hon. Member in the House. As this is not a party matter and I think that all hon. Members would like to have a greater degree of justice over what is looked upon as the Easter offerings I suggest that we do not divide the House on the Clause, but try to get agreement between now and Report.

I should like to take the hon. Gentleman up on what he said, because I thought that his suggestion went much further than he intended. He went quite a long way in suggesting that there should be discussions. I do not think that he had his heart in his brief today, because he has made speeches on this side of the House in the past which were in favour of the spirit of this Clause. There are many difficulties to iron out. One of the great difficulties, of course, is that, clearly, the present law encourages parsons and churchwardens to be dishonest. I cannot think of any system which will break down the moral life of this country—it is breaking down rapidly enough—more than one by which the one tower of truth and purity, the Churches, are encouraged to be dishonest.

If I send a parson a private gift it is not subject to tax, but if I go to church and put the same amount of money in the plate it is. Every sensible person must agree that we cannot go on having these debates year after year. Whatever view the Treasury takes, the amount of money involved is a mere bagatelle. The process needs tidying up and I hope that the Minister without Portfolio will call a conference of people who understand the problem and obtain a coherent solution of it.

6.0 p.m.

The new Clause is not a complete answer to the problem. The majority of people who are interested in this matter are sick and tired of the subject being raised year by year, meaning that we are debating the matter in a vacuum, so to speak. Since the Minister promised to try to find a solution by having consultations an the subject, I hope that my hon. Friend will not press the new Clause.

Sir C. Black

In the light of the assurance that has been given—that the Treasury will consider representations without delay and prior to Report—I beg to ask leave to withdraw the new Clause.

Sir Eric Fletcher

I did not say before Report. This will take some time, but I would welcome dicussions on the subject with the hon. Gentleman and others who are interested in it to see whether a solution can be found which is acceptable to all parties in the Committee.

The Deputy-Chairman (Sir Samuel Storey)

The Question is—

Sir Eric Fletcher

On a point of order. I understood that the hon. Member for Wimbledon (Sir C. Black) wished to withdrawn the new Clause.

The Deputy-Chairman

He cannot withdraw it after an hon. Member has intervened. It would be out of order for him to do so.

Sir Eric Fletcher

I thought that I intervened before the hon. Gentleman had withdrawn it.

The Deputy-Chairman

The hon. Member for Wimbledon (Sir C. Black) asked leave to withdraw the new Clause. If an hon. Member rises after that, the Question must be put.

Question put and negatived.